Bloom Energy claims that it will be an unstoppable force in the alternative energy business and its got huge corporate support

The
future of energy is now, says Bloom Energy. At a press
conference today, it unveiled its surprisingly small fuel cell
"solutions" boxes. The so-called "Bloom Energy
Servers" – which are about as tall as an adult male – can
use virtually any hydrocarbon fuel (methane, propane, ethanol,
gasoline, liquified coal) and produce energy twice as efficiently as
a coal plant. Bloom Energy is trying to revolutionize the power
generation industry – the key is cutting out the middle-man (power
transmission) and embracing a modular design akin to servers, the
backbone of the internet.

The company's fuel cell boxes are
composed of ceramic (sand derived) discs and special ink. It
garnered
attention earlier this week when it was featured on the CBS news
program 60 Minutes. While many alternative energy
startups have struggled to find financial backers, it already has
publicized major support from some of the tech industry's biggest
names -- Google, eBay, Fedex, Staples, and Walmart.

At
the event it announced that its fuel cell generators emit 60 percent
less carbon per unit energy than a traditional coal power plant.
And unlike a coal power plant, the power is produced on site so there
are no grid losses. The whole process can be carbon neutral if
the hydrocarbon source is an organic such as algae or switchgrass
ethanol (as opposed to fossil fuels).

K. R. Sridhar, the
ex-NASA researcher who founded the company says that he initially
developed the technology to power Mars colonies, but in the end it
proved too compelling not to offer on Earth. He states, "After
spending a decade of working on this, I had to look back at our first
home. While I was dreaming about Mars and our colonies, historically
unprecedented things had happened on Earth. For me, it was
really a composite image of... a bright world and a dark world. It
was the image of the world of haves and the world of have nots. Those
who had the opportunity for economy growth and those who were denied
that."

He said the company was founded to provide the two
billion people worldwide without access to affordable power a new,
affordable energy source.

The result he obtained was a fuel
cell that went from "powder to power" and was "twice"
as efficient as traditional power plants due to the on-site scheme
eliminating grid losses. In his designs, a single fuel cell
disc produces 25 W; a "stack" composed of multiple cells
produces 1 kW; a "module" produces 25 kW; and a
corporate-ready "system" produces 100 kW. A corporate
"solution" (consisting of several Bloom Energy Servers or
"systems") supplies up to 1 MW of power.

The
power is continuous and flexible, unlike solar or wind energy.
As Mr. Sridhar describes, "This is not when the sun shines, this
is not when the wind blows... that's how this little piece of sand is
different than what's been done before.""

The real
flesh of Bloom Energy's plan, though, is its planned consumer debut
which will be carried out over the next few years. Bloom aims
at providing consumers with $3,000 units that will produce enough
power to support the average home at minimal fuel cost. It
plans to push the power generation industry towards the same model
that made the internet so fabulously successful -- server-based
scaling. In fact, it refers to its products as energy "servers"
-- entirely flexible, modular power units.

The units (of any
size) pay back their cost within 3 to 5 years and they will operate
efficiently for 10 years (at which point they would presumably be
serviced with new catalyst material, i.e. new fuel cell discs).

At
the event Bloom Energy mentioned several more big backers --
Coca-Cola, Bank of America, Cox -- that
have embraced the company's power generators [PDF]. Many of
these backers -- including John Donaho of eBay, Bill Simon of
Walmart, Brian Kelly of Coca-Cola, and Google's Larry Page – spoke
at the event expressing their wild enthusiasm for Bloom Energy's
delivery. Describes Donahoe, "It was almost too good to be
true."

With that kind of corporate support, it's hard not
to buy in to the hype. One thing that Bloom Energy did not note
was that most of the adoption thus far has been in California where
tax breaks could discount the Bloom Energy Servers by as much as 20
percent. With an additional 30 percent federal tax break for
"green" investments, the costs could be cut even further.
Still, even without tax breaks, if the company's payoff numbers and
reliability are as good as it says, the units could enjoy market
success. If that's true, that's great news for the startup and
a rarity in this business segment.

There are still some
unresolved questions, however. What exactly is the secret
"colored inks" that Bloom Energy paints its cells with and
are so great at catalyzing the production of energy from hydrocarbon
fuels? Bloom Energy still hasn't revealed the formula (perhaps
it's patent pending). Still, it today offered a lot more
details on its big corporate backing, its efficiency numbers, and its
plan for consumer rollout. It's definitely going to be a fun
ride watching this one in years to come.

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It seems he's claiming about a 65-70% effiency figure, which is in the range of the best solid oxide fuel cells. So its feasible...though I'm guessing only economic at present due to the large state and federal subsidy. That may change if they can manufacture the boxes cheaper at some future point in time.

And yes, line losses average about 7% in the US. In Calif, I think they're closer to 10-12% though, thanks to that state refusing to generate its own power, and instead ship it in from out of state.

Putting my EPE hat on for a minute, there are a couple of interesting details omitted in the story. First, how long to start up a cold stack? I'm guessing based on the information supplied, it is probably around 2-5 minutes given the system architecture. Much longer to start cold system I suspect, but the average user won't do that often.

Net/net, my guess is that if a power company installs these, they will treat the power produced as 10% or so base load (generated basically 24/7), another 15 to 20% swing load (bringing the system to where it can operate at 100% on demand) and the remaining 70% as peaking power. (Basically instant response.)

Now let's look at cost. Current pricing is not quite competitive, but that is not a surprise. As everyone in the computer industry knows, staying on "the bleeding edge" costs. Not just in system pricing, but in the headaches you buy into with beta hardware and software. Unfortunately, someone has to be out there, or there wouldn't be any progress, Large companies invest in prototype and beta systems (for test environments) to be able to field the systems faster when the technology is ready for production use.

The stated cost of a Bloom Box today is clear, the power produced though is not. "Bloom Energy said a single one of its units would power about 100 homes and cost $700,000 to $800,000, but did not disclose how much natural gas would be needed." http://www.businessweek.com/globalbiz/content/dec2... "Each Bloom Energy Server provides 100 kilowatts (kW) of power in roughly the footprint of a parking space. Each system generates enough power to meet the needs of approximately 100 average U.S. homes or a small office building." http://c0688662.cdn.cloudfiles.rackspacecloud.com/...

How does 7-8 thousand dollars per kilowatt look to a utility as a peaking power cost? High, but given low fuel costs, tolerable. Assuming Bloom can get it down to $2000 per kilowatt ($200,000 per 100kw module)? Now it is competitive with even the cheapest base load units, and lower fuel costs make it a slam dunk. (Nuclear is in the $4k and up range, solar and wind over $10k.) Can Bloom get its prices that low? Sure. ;-) I don't think a system weighs much more than 20 tons, and $5/lb. covers some pretty heavy production costs. (I'm assuming that the copper parts in the system will be the most expensive component by weight.)

So once they get system costs under $500,000 I would expect utilities to get very interested. At $350,000? Bloom should concentrate on making the modules and license the rest. Utilities will be buying them as fast as they can be produced, and companies like GE have the experience in selling into the electric power industry, plus the necessary experience to make the system life in decades, without blowing up. (There is little or no risk of that in a situation like they are selling into now. But in a "real" grid power providing installation, you have to deal with things like lightning strikes on power lines--or the module itself.)

Right now, anyone go out and buy a 100 kw Generac "mobile" NG generator for less than $25,000 (I'll use 25k for easier math). That's 28-35 times less than the 100 kw Bloom unit and the same size. Oh, and that's $250 a kilowatt and only weighs 2700 lbs.

Also the Bloom is "only" twice as efficient as "normal" means, and some portion of that is due to being located closer to the point of use. Well, the Generac would be on site, too, so it would also "gain" that same amount of efficiency. So now the Bloom is less than 2x as efficient. There is no way a Bloom is going to pay for itself in 3-5 years with numbers like this. Also, conveniently not considered, as others have pointed out, is the cost of NG infrastructure, etc. You'd be lucky to recover your costs in 14-18 years. That's also assuming that the Bloom units don't loss any efficient through out their lifespan.

Further, the units operate at 1000 C. Where's all the waste heat go? Do we have 100% efficient insulators now too? What's the mean time to failure at those temps? How does it fail? Does it melt through the floor, explode, or just cool off quietly?

So even at $500,000 one can buy 20000 kw of power capacity, not just 100 kw. And that can be ramped up and down in 100 kw chunks as needed. Even at your stated target of $2000 a kw, no one should be interested when the conventional means are an order of magnitude less expensive. Unless noise is your issue. They should be ideal in that department.

What's disquieting is that everyone thinks that Bloom is a miracle or something that's ready for 100% deployment. It's not. It's way overpriced for the level of efficiency and output that it produces. I see no solid evidence fuel usage or efficiency vs current methods warrant $700,000 / 100 kw prices. What is interesting is no moving parts, ultimately small point source like size. It has a niche, but it's not going to replace every current power plant. Get the price down to $50,000 / 100 kw (or less) and then they'll be replacing on-site power generators everywhere, as backup units but not main power sources.

At least until the NG runs out. We could make more methane, but aren't we trying not to, because cows, um, you know, is bad right? If it ran off hot air we could hook them up to politicians and have an infinite source of energy. :-)

While my gut reaction was to go with the "environuts" comment, it's strange I can find with a few simple searches 68 dealers of Residential, Commercial, and Industrial Generac branded generators, in California, selling exactly the type of natural gas driven generator I used as a reference. I can also find 46 dealers offering service of said same generators.

I'm going to have to assume with that many dealers selling in California that their target customer is also in California, not some other state. (There's possibly more such equipment being sold in California, as these were only those listed as selling Generac brand equipment and does not count those who sell other similar equipment but is not Generac branded).

The operating temperature is 1000C. However, assuming a 66% efficiency, a 25kW stack would produce internal heat in the order of 12 kW (that's in excess of 42 000 BTU per hour in heat). The issue would not be keeping the unit at operating temperature with any kind of decent load (>20%), but to cool it. As for the mobile natural gas generator, you pay 30 times less capital costs and twice the operating cost. I don't know how long the Generac will run, and the loss of efficiency during the life time is probably at around 10-15% (wear on turbine, increased resistance in electrical contacts, loss of magnetic efficiency).